Once a name synonymous with Apple’s iPhone, Foxconn is now forging a new identity at the heart of the AI revolution. After decades of relying on smartphone assembly for the bulk of its revenue, the world’s largest contract manufacturer has announced a historic shift in its business, reporting for the first time that its sales from AI servers and cloud infrastructure have surpassed those from consumer electronics.
From iPhones to AI: Foxconn’s business shift
For years, Taiwan’s Foxconn built its empire on assembling millions of Apple’s iPhones, becoming the backbone of global consumer electronics. But the company’s main revenue driver has now changed. Riding the wave of the AI boom, Foxconn has successfully diversified beyond Apple, with earnings from AI servers and other cloud-networking products surpassing smartphones for the first time in the second quarter.
Consumer electronics now make up just 35% of revenue, while cloud and networking have risen to 41%, a stark contrast to 2021 when iPhones and related products represented more than half of total sales.
Betting big on AI before it was cool
Foxconn’s pivot didn’t happen overnight. Concerned about slowing iPhone sales and the risks of overdependence on Apple, Chairman Young Liu began steering the company into new areas like AI servers, electric vehicles, and semiconductors when he took the helm in 2019.
While EVs and chips have yet to make a major dent in overall revenue, the company’s foresight in AI hardware has paid off. Foxconn is now Nvidia’s biggest server manufacturer—a relationship built on early commitments that began long before ChatGPT and the global AI race brought the technology to the spotlight in late 2022.
Decades of partnership and strategic vision
Foxconn’s deep ties with Nvidia and other AI leaders reflect a history of long-term bets. The company first started producing reference designs for Nvidia graphics cards around 2002 and later expanded into general-purpose servers for data centers as early as 2009. Today, it controls nearly 40% of both the general-purpose and AI server markets, cementing its place as a global leader.
As Ming-Chi Kuo of TF International Securities explained to Reuters: “The company has been in the business for years, meeting higher quality requirements, diversifying assembly and operations across sites, and pursuing vertical integration.”
He added that Foxconn is often willing to invest earlier than rivals, citing its previous bold moves with Apple and, more recently, Nvidia: “In long-term partnerships, Foxconn is more willing to take the initiative.”
What lies ahead for Foxconn?
Industry analysts point to Foxconn’s expansion plans—establishing new factories in Houston, Texas, as part of Nvidia’s massive $500 billion U.S. investment drive, along with additional facilities in Mexico dedicated to AI server production for American clients—as clear evidence of its long-term strategy. The company is projecting that its AI server revenue will surge by more than 170% year-on-year in the third quarter.
Source: Reuters